Microsoft 'Do Not Track' Move Threatens Free Internet

Microsoft's (MSFT) "do not track" feature in its latest Web browser boosts user privacy, but some say it threatens the Internet business model that depends on ads in order to give users lots of free content.

In a move that has angered many advertisers and ad firms, Microsoft's Internet Explorer 10, released last month with its new Windows 8 operating system, makes "do not track" the default.

When users visit a website, their actions are tracked by "cookies" and other monitoring software. This helps advertisers and ad-placement firms target ads to users' interests. Targeted ads improve the performance of ads and boost ad sales — making the Internet work, says the Information Technology & Innovation Foundation, a nonprofit public policy think tank in Washington, D.C.

"Without advertising, users cannot get all of the free materials that they have come to enjoy with the Internet," Daniel Castro, a senior analyst at ITIF, told IBD.

But it's a complex issue.

Cookies don't capture (at least, aren't supposed to) personal data like name, address or age, but the software helps build a user profile. Then, for example, folks who visit auto dealer sites or do car searches will get car ads sent their way.

Ads Reach Receptive Viewers

In theory, it's a win-win. Users get ads they actually want to see, and advertisers get their ads in front of a receptive audience.

But many users don't like the idea of unseen entities tracking their actions and possibly making this public by mistake or at the request of law enforcement. The Internet privacy debate continues to rage.

Microsoft's earlier versions of IE — as well as other browsers such as Google's (GOOG) Chrome and Apple's (AAPL) Safari — offer "do not track," but not as the default. Users had to invoke the feature themselves, usually with a couple clicks on the right menu choices.

And IE 10 isn't alone in such default settings. Some smaller search engines also do so. One is Duck Duck Go, which gives a thorough explanation of just why it does so at duckduckgo.com/privacy.html.

IE's market share has been slipping, but it's still No. 1. According to tracker Net Applications, IE had 48% of the global PC Web browser market share in October, followed by Mozilla's Firefox at 18%, Chrome at 17% and Safari at 11%.

The big difference with IE 10 is that "do not track" is the default. Privacy advocates applaud the change, saying it makes the Internet more anonymous and safer.

Others strongly disagree.

"The Internet industry has developed a self-regulatory program (giving users the option to opt-out) for behavioral advertising," said Dan Jaffe, group executive vice president of government relations for Association of National Advertisers. "There is no need for companies like Microsoft to put their own programs in place."

The Digital Advertising Alliance, which works with the ANA, developed this self-regulatory program. Users can go to the youradchoices.com website to view videos about targeted ads, or what the industry calls interest-based advertising, and can see how to opt out of the tracking that brings users ads that, based on their Internet browsing history, users may want to see.

Jaffe says 8.7 million users have visited youradchoices.com.

But some observers say many consumers don't know about youradchoices.com and don't fully understand how tracking systems work.

"Many consumers know that websites are collecting information about them, but I don't think they're aware of how much information is collected, or that the information can be used to build a targeted profile about them," said Michael Cherry, an analyst at independent research firm Directions on Microsoft. "They are confused by what steps they can reasonably take to limit being tracked."

No one seems to have a hard number on just how many consumers have taken action to implement "do not track." But Jaffe estimates that more than 90% of the 8.7 million people who have visited youradchoices.com have elected to keep the tracking function.

Another factor, though, scrambles the entire issue. Even if a user implements "do not track," websites can still track. At the moment, there is no law against this.

Moreover, websites can deny access to users with "do not track" implemented. The ITIF has said it will do just that.

ITIF's Castro says that if too many users opt for "do not track" and that cuts online ad sales, then new Internet business models might have to be developed and users might well end up having to pay for some content they now get for free.

The U.S. government has sat on the sidelines, but it might feel obliged to step in, say at least three Internet observers contacted for this story.Abroad, Great Britain has enacted policies so consumers have to sign off on being tracked. It's too early to tell how that's gone.

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